California’s cannabis cultivators are in danger of losing tens of thousands of dollars in earnings as scores of temporary business licenses expire daily before the state can substitute them with annual licenses.
That leaves several cannabis cultivators trapped at a licensing logjam with a tricky choice: Continue operating with expired licenses — or close down.
This is the beginning of the outdoor farming season, and many farmers moved ahead and planted despite knowing that their temporary licenses were set to expire — holding out hope that state regulators would speed up the licensing process and issue annual permits.
That largely hasn’t happened. And lawmakers in Sacramento have yet to pass on a legislative fix.
As of April 16, roughly 3,000 temporary farming licenses had expired and the California Department of Food and Agriculture (CDFA) had issued only 62 annual licenses and 564 provisional permits. “I do believe the state will get our license approved in time,” said Wendy Kornberg, CEO of Sunnabis, a cultivator in southern Humboldt County with temporary licenses expiring April 17.
“I would lose my property. I’d lose my home. I’d lose my farm. We would have nothing left”, Wendy states.
Senate Bill 67, that will amend a part of the California Business and Professions Code to expand temporary company licenses until the end of 2019, passed from the state Senate earlier this month and moved into the Assembly.
The bill will need fiscal committee and floor votes before landing the governor’s desk.
Industry watchers anticipate more than 6,000 temporary farming licenses will expire by the beginning of May.
Cannabis cultivators : No option but to grow
Mikal Jakubal owns Plant Humboldt, a cannabis nursery in Humboldt County. His temporary permits expired March 31, but he’s still working.
“Those of us who started seeds don’t have any option but to grow them out,” he said.
“If we were to shut down, we would go bankrupt — and we wouldn’t start again.”
Some business owners who continue to operate with expired licenses do not want to publicly talk, but not Jakubal.
“Frankly, I think more people need to be outspoken,” he noticed.
Jakubal stated he thinks there’s a lack of comprehension in Sacramento about the way his business and others like it function, namely based on seasonal elements.
“The seasons don’t wait,” he added. “The calendar doesn’t stop because the regulators are twiddling their thumbs.”
Jakubal’s operation is not financed with countless outside investments that would keep him capitalized through weeks of lost income.
He completed his application for an annual permit at the end of 2018 but has not heard anything from state regulators.
Now he is hoping he’ll get his yearly licenses by the time his plants are ready for sale in a few weeks.
He is anxious, though, that if the cultivators who would typically purchase plants can’t get their licenses, then he will “be stuck with a bunch of plants.”
Cannabis cultivators attempt to keep licenses current
Kornberg in Humboldt has attempted to prevent her licenses from dying by filling out applications and paying the fees, as well as communicating as much as possible with the CDFA.
“We must plant our plants. I really don’t understand exactly what to do.”
Her farm is a little, family-run operation. Employees are still attempting to process cannabis from 2018, a job they’ll have to cease once the company’s permits expire.
“There is a possibility of losing our crop from this past year,” Kornberg said.
She said her company could weather without a license for a couple of months, but in the event the licensing problem were to go on for, say, half a year, “that is a problem.”
“If I had cash buried in the floor somewhere,” Kornberg said, “we could wait until June or July, but that’s not our situation.”
In Oakland-based CWG Botanicals, cannabis cultivator Rebecca Kirk’s temporary license expired March 21. She applied for her annual license in May 2018.
State authorities told her on March 29 she had deficiencies in her yearly permit application, including a missing copy of her lease.
According to Kirk, she provided the essential copy of her lease so as to receive her initial temporary permit, but the state lost it.
She’s had to cease and desist operations for the time being.
“We are only idling,” she said. “Losing thousands (of dollars in revenue) a week.”
What information do marijuana lawyers have?
Los Angeles-based cannabis attorney Pamela Epstein has multiple clients who applied for annual permits annually and also have seen their own temporary licenses.
“The whole program is prefaced off of having cannabis,” she explained. “If you’ve got no cannabis that’s cultivated lawfully, then you’re responsible for the uptick in the illegal market and the ultimate rise in prices.”
Although regulators have told her several times that provided that her customers are maintaining compliance they won’t be targeted by law enforcement, she is not buying in to it.
“If you don’t have an active state license, you’re not permitted to conduct commercial cannabis action,” Epstein said. “This means planting, harvesting, caring for those plants.”
Oakland-based cannabis attorney Kieran Ringgenberg stated California’s licensing issue could affect businesses’ abilities to create long-term business plans.
“If there is just a short pause, and as long as there’s no enforcement activity, this may just have a moderate impact,” he added.
“If there begins to be enforcement or that stretches on as long that individuals can not transfer product or pay their accounts, then obviously people will be out of business.”